Grayscale’s Delay in Regulatory Procedures for Bitcoin ETF
A wave of anticipated Bitcoin (BTC) spot ETF approvals appear days away from launch – yet one of the race’s largest players may be behind on its regulatory procedures.
Bloomberg ETF analyst Eric Balchunas noted that Grayscale’s latest S-3 filing for its Bitcoin ETF is still missing critical information that rival fund managers have already included in their applications.
What Is Grayscale Waiting For?
As of January 2, Grayscale still hasn’t confirmed the firms that will be authorized participants (APs) for its Bitcoin ETF.
APs are responsible for creating and redeeming shares of the ETF to keep its price joined at the hip with BTC at all times. However, Grayscale left blank spaces where the APs should actually be named.
“Not sure why since SEC wants to see it and they have been pretty cocksure about having one,” wrote Balchunas to X (formerly Twitter) on Tuesday.
When applying for ETF approval in June 2022, Grayscale announced that Jane Street and Virtu would have been its market-making giants APs. However, they haven’t confirmed these firms yet.
“Until we see we aren’t counting any horse as official,” added Balchunas. “Also, BlackRock, Fidelity et al did it, so why not be done with it?”
Incoming ETF Approvals
The SEC has held numerous meetings with Grayscale, BlackRock, and other Bitcoin ETF applicants over the past three months since losing its related court battle against Grayscale in August.
The agency’s more engaging tone has analysts all but certain that an ETF will be greenlighted by January 10 – the deadline for approving or denying the Ark/ 21Shares ETF application. Grayscale has also pressured the SEC to ensure that it approves all rival applicants simultaneously, if at all.
Last week, numerous fund sponsors updated their filings to include management fee rates. However, Grayscale and BlackRock are yet to unveil their rates.
As of today, Grayscale charges GBTC investors a 2% management fee, though CEO Michael Sonnhenshein has promised to drop the fee once the fund transitions into an ETF.
Hot Take: Grayscale’s Regulatory Delays Raise Questions
Grayscale’s delay in providing critical information in its Bitcoin ETF application raises questions about its readiness compared to rival fund managers. With the SEC’s more engaging tone and the anticipated approval of Bitcoin ETFs, Grayscale’s failure to confirm authorized participants (APs) and reveal management fee rates may hinder its chances of success. The SEC’s upcoming deadline for approving or denying the Ark/21Shares ETF application adds further pressure on Grayscale. As other applicants update their filings and provide transparent information, Grayscale’s delays stand out. Investors and analysts are left wondering why Grayscale is falling behind and whether it can catch up before the deadline.
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